The Republicans and Democrats have become dangerous
extremists. They want to spend nothing or spend too much, enrich
the rich or strip them bare, regulate nothing or everything,
rule the world or wall it off. Their only point of agreement is
that the other party is destroying the country. On this, they’re
both right.

The political rift offers an unusually propitious moment
for a third-party presidential candidate to give the two parties
a run for their money. I’m even willing to predict we’ll have
one by this fall.

The Republicans and Democrats have done a terrible job of
managing our country and economy, transforming the American
dream into a nightmare. They’ve squandered our youth and wealth
in endless wars we couldn’t win, and spent six decades running
an intergenerational Ponzi scheme, racking up huge official and
unofficial debts for our children to pay.

By some measures, the U.S. is now in worse fiscal shape
than Greece. True, our official debt is a much smaller
percentage of economic output. But our unofficial debt is much
larger. The unofficial debt includes primarily the obligation to
pay 78 million baby boomers roughly $40,000 a head each year of
their very long retirements in Social Security, Medicare and
Medicaid benefits. To get our overall fiscal gap under control,
the U.S. must cut spending or raise tax revenue by $20 trillion
over the next decade, far more than either the president wants
or the House Republicans seek.

National Saving

By taking ever larger sums from young savers and giving
them to old spenders, the two parties have driven our national
saving rate to zero (0.1 percent of national income) and our
domestic investment rate to just 4.4 percent of national income.
On net, foreigners are the only ones still investing in our
country. That’s one reason our currency is progressively
weakening.

The Reds and the Blues weakened financial regulation while
pocketing hefty campaign contributions from bankers and
financiers, sat back while Wall Street sold trillions in toxic
assets, and then bailed out virtually every financial miscreant
in sight. To cover the costs, they “encouraged” our
“independent” central bank to print as much money as needed.
The Federal Reserve has now injected more than $2 trillion into
the financial system over four years, more than tripling our
base money supply and laying the groundwork for hyperinflation.

Wall Street Architects

Rather than transform “trust me” banking into “show me”
banking, our leaders hired the architects of Wall Street’s
collapse to patch it up. Even worse, they promised, either
explicitly or implicitly, to cover virtually all of Wall
Street’s future gambling losses. The next collapse, which U.S.
fiscal policy will shortly engender, will put the Fed on
autopilot to print trillions more.

If the goal is a third-world economy, these folks are
succeeding. The unemployment rate is stuck at almost 10 percent.
Workers’ average real earnings per week haven’t budged in 40
years. Wage and wealth inequality is deplorable and getting
worse.

For those not blessed with special talents, good breaks or
connections, tough luck. Our primary and secondary education
lags far behind that of other developed nations. For many of our
children, quality higher education is now unaffordable. For
others, it’s a path to student-loan debtors’ prison.

Employers in Charge

Our employers are neither our parents nor our friends, but
the Red-Blues have put them in charge of our health care, much
of our saving and investing, and our tax breaks. The result is a
mess. Those without a benevolent employer have been left at the
mercy of the cherry-picking health-insurance industry, which has
succeeded in leaving 50 million Americans uninsured. Rather than
fix health care from scratch, we’ve been saddled with yet
another government system: health exchanges, with costs that
will probably explode.

Social Security is in worse long-run fiscal shape now than
it was in 1983, the last time politicians “fixed” it. It’s
running cash-flow deficits and can no longer afford to mail us
our annual benefit statements or even put them online. According
to its trustees’ report, the system needs, immediately and
permanently, a 27 percent tax increase or a 20 percent benefit
cut.

Indecipherable Rules

Even if Social Security were solvent, as opposed to
seriously broke, the 2,728 rules in its handbook are
indecipherable. Millions of retirees are taking the wrong
benefits at the wrong time because they can’t make sense of a
system that redefines the word complexity.

The federal income tax offers another example of complexity
run amok. Together with the other 17 major tax-transfer programs
now active in the U.S., it has made a mockery of tax
progressivity and left virtually the entire country in very high
marginal tax brackets.

We need to fix America from the ground up, but both parties
stand in the way. Come November 2012, the American public will
have an alternative to the Democrats’ and Republicans’
incompetence. Mark my words.

(Laurence J. Kotlikoff, a professor of economics at Boston
University, is a Bloomberg View columnist. The opinions
expressed are his own.)